Contribution from Mario Draghi, President of the ECB, Published in "Die Zeit", 29 August 2012
"Across Europe, a fundamental debate is taking place about the future of the
euro. Many citizens are concerned about where Europe is heading. Yet the
solutions presented appear to them unsatisfactory. This is because
these solutions offer binary choices: either we must go back to the
past, or we must move to a United States of Europe.
My answer to the
question is: to have a stable euro we do not need to choose between
The reason this debate is taking place is not the euro as a currency. The
objectives of the single currency remain as relevant today as they were
when the single currency was agreed. To spread price stability and
sustainable growth to all European citizens. To reap the gains of the
world’s largest single market and make the historic process of European
unification irreversible. To raise Europe’s standing – not only
economically but also politically – in a globalised world.
The debate is taking place because the euro area has not yet fully
succeeded as a polity. Currencies ultimately depend on the institutions
that stand behind them. When the euro was first proposed, there were
those who said it would have to be preceded by a long process of
political integration. This was because sharing a currency would imply a
high degree of joint decision-making. Member countries would be a
“Schicksalsgemeinschaft” and would need strong common democratic
But a deliberate choice was made in the 1990s not to give the euro such
features. The euro was launched as a “currency without a state” to
preserve the sovereignty and diversity of member countries. This
informed the so-called “Maastricht setup”, which laid the euro’s
institutional foundations. But as recent events have shown, this
institutional framework left the euro area insufficiently equipped to
ensure sound economic policies and effectively manage crises.
For this reason, the way ahead cannot be a return to the status quo ante.
The challenges of having a single monetary policy but loosely
coordinated fiscal, economic and financial policies have been clearly
revealed by the crisis. As Jean Monnet said, coordination “is a method which promotes discussion, but it does not lead to a decision.” And strong decisions have to be made to manage the world’s second most important currency.
A new architecture for the euro area is desirable to create sustained
prosperity for all euro area countries, and especially for Germany.
root of Germany’s success is its deep integration into the European and
world economies. To continue to prosper, Germany needs to remain an
anchor of a strong currency, at the centre of a zone of monetary
stability and in a dynamic and competitive euro area economy. Only a
stronger economic and monetary union can provide this.
Yet this new architecture does not require a political union first.
It is clear that monetary union does entail a higher degree of joint decision-making. But economic integration and political integration can develop in parallel. Where necessary,
sovereignty in selected economic policy fields can and should be pooled
and democratic legitimation deepened.
How far should this go? We do not need a centralisation of all economic
policies. Instead, we can answer this question pragmatically: by calmly
asking ourselves which are the minimum requirements to complete economic
and monetary union. And in doing so, we will find that all the
necessary measures are firmly within our reach.
For fiscal policies, we need true oversight over national budgets. The
consequences of misguided fiscal policies in a monetary union are too
severe to remain self-policed. For broader economic policies, we need to
guarantee competitiveness. Countries must be able to generate
sustainable growth and high employment without excessive imbalances. The
euro area is not a nation-state where persistent cross-regional
subsidies have sufficient popular support. Therefore, we cannot afford a
situation where some regions run permanently large deficits vis-à-vis
For financial policies, there need to be powers at the centre to limit
excessive risk-taking by banks and regulatory capture by supervisors.
This is the best way to protect euro area taxpayers. There also needs to
be a framework for bank resolution that safeguards public finances, as
we see in other federations. In the U.S., for example, on average about
90, mostly smaller, banks per year have been resolved since 2008 and
this had no impact on the solvency of the sovereign.
Political union can, and shall, develop hand-in-hand with fiscal, economic and
financial union. The sharing of powers and of accountability can move in
parallel. We should not forget that 60 years of European integration
have already created a significant degree of political union. Decisions
are made by an EU Council filled by national ministers and by a directly
elected European Parliament. The challenge is to further increase the
legitimacy of these bodies commensurate with increasing their
responsibilities and to seek ways to better anchor European processes at
the national level.
A more solid political foundation should allow for agreement on a basic
principle: that it is neither sustainable nor legitimate for countries
to pursue national policies that can cause economic harm for others.
This constraint has to be built into how countries design their economic
and social models. The only sustainable model is one that is consistent
with the terms of a common currency. Countries have to live within
their means. Competition and labour markets have to be reinvigorated.
Banks have to conform to the highest regulatory standards and focus on
serving the real economy. This is not the end, but the renewal of the
European social model.
From the ECB’s perspective, a strong economic union is an essential
complement to the single monetary policy. Building this will require a
structured process with correct sequencing. Yet citizens can be certain
that three elements will remain constant. The ECB will do what is
necessary to ensure price stability. It will remain independent. And it
will always act within the limits of its mandate.
Yet it should be understood that fulfilling our mandate sometimes requires
us to go beyond standard monetary policy tools. When markets are
fragmented or influenced by irrational fears, our monetary policy
signals do not reach citizens evenly across the euro area. We have to
fix such blockages to ensure a single monetary policy and therefore
price stability for all euro area citizens. This may at times require
exceptional measures. But this is our responsibility as the central bank
of the euro area as a whole.
The ECB is not a political institution. But it is committed to its
responsibilities as an institution of the European Union. As such, we
never lose sight of our mission to guarantee a strong and stable
currency. The banknotes that we issue bear the European flag and are a
powerful symbol of European identity.
Those who want to go back to the past misunderstand the significance of the
euro. Those who claim only a full federation can be sustainable set the
bar too high. What we need is a gradual and structured effort to
complete EMU. This would finally give the euro the stable foundations it
deserves. It would fully achieve the ultimate goals for which the Union
and the euro were founded: stability, prosperity and peace. We know
this is what the people in Europe, and in Germany, aspire to."
Reading this it is impossible to see a way forward for the United Kingdom within the European Union. The UK has virtually no say in EU monetary policy, nor has it any interest in the kind of European Union that is envisaged here. The attempt to "set the bar far too high" by demanding "a full federation" before stability can be assumed to be assured to the Euro has been determined and sustained, and it is still impossible to know whether it has been successful. But the yields are falling, the currency strengthening against the US dollar and the pound. Extant provisions within the treaties of the Union itself and, more particularly in the treaties setting up the European Central Bank, are being brought into operation (though many are surprised to find that they are there at all) covering the objectives Mario Draghi sets out as sufficient for a strong and stable currency; as well as for the further development of oversight, compatible fiscal policies, and an ethical stance on what may be adopted as policy by Member-State governments.
None of which is being constructed, or has been constructed, with the active participation and input of the UK.
If the Euro survives, the misfit will be ever more accentuated: monetarily, fiscally, ethically and, most of all, and the most felt at the moment, legally and constitutionally. We are looking, too, at the devastation of United Kingdom European policy of all the major UK Parties since at least the early 1970s.
SUPPLEMENTARY CONVENTION ON EXTRADITION BETWEEN THE UNITED
STATES OF AMERICA AND THE KINGDOM OF SWEDEN
TIAS 10812 35 U.S.T. 2501; 1983 U.S.T. LEXIS 131
March 14, 1983, Date-Signed September 24, 1984, Date-In-Force
If the extradition request is granted in the case of a person who is being prosecuted or is serving a sentence in the territory of the requested State for a different offense, the requested State may:
(a) defer the surrender of the person sought until the conclusion of the proceedings against that person, or the full execution of any punishment that may be or may have been imposed; or
(b) temporarily surrender the person sought to the requesting State for the purpose of prosecution. The person so surrendered shall be kept in custody while in the requesting State and shall be returned to the requested State after the conclusion of the proceedings against that person in accordance with conditions to be determined by mutual agreement [*7] of the Contracting States. "
makes clear why no-one in their right mind (once properly informed rather than relying on what cognitive scientists refer to as 'folk' understandings - eg folk physics) would agree to go to Sweden on the doubtful grounds that Mr Assange is being sought by the Swedes.
Unfortunately for the Americans the United Kingdom has judicial processes that have to be gone through on extradition requests. Sweden has Executive decision-taking for the 'lending' of a prisoner for any period the contracting states choose at any moment of the Swedish state's pleasure. Short of extraordinary rendition (which when practised in Milan made the Italians very cross indeed and has led to a fistful of US agents now permanently excluded from Italy on pain of instant arrest and prosecution) Mr Assange had to be delivered to a more 'appropriate', a more 'yielding' judicial environment for transfer to America.
In these circumstances Angels would have nipped smartly into a friendly embassy too.
Shame on Australia though for seeming to fail one of their citizens so completely.
Everything beyond the crest of the hills surrounding the ecohouse has burned. Woods of cypress trees interspersed with Mediterranean pines, and oak, underbrush of juniper, cistus, wild orchids, roses - all blackened ash. The animals that made it out look at us from our woodland, seeking water and resting places. And we were lucky. The wind drove the fire away from our woods to devour hectares and hectares of classic Tuscan landscape the other side of the hills. We can't even see the devastation just over our skyline - but we can smell it.
All day long the firefighters, the Canadair, the helicopters, gouged fire breaks through secolare landscapes, emptied every site with standing water (the Arno is dry from bank to bank) every swimming pool, as the spotter planes circled, looked for fresh outbreaks. People were being evacuated from settlements and farms, and we were checking that we had everything important and the Landie keys on the shelf by the door ready to take the back route to the village through the olive groves on the rough white roads, so painstakingly restored over the last decade.
The sky was black with smoke and underlit by the flames, with a shimmering in the air from the heat. What we didn't realise was the sky was black too from an enormous thunder cloud that burst over the whole nightmare of burning effort and lives, of men and animals. It hadn't rained since last June but water sluiced down so hard and so cold it hurt to be under it. Which we weren't as soon as the lightning started landing in what felt like the garden. So the fires were doused, the roads turned to river beds and we couldn't have got out then because of the mud.
Where that rain came from with such force is unexplained to non-meteorological mortals (and Angels). The blasting heat is back and the woods have dried again to tinder-boxes. The fire was set deliberately, as are most. Someone knows who did that and, I am told, their family will be made to pay - not by the magistrates and other authorities but by a threatening (and so threatened) community. I'm unsure which is the more scary: the burning of the countryside or the burning of the whole extended family of the fire-setter.
'That the Pussy Riot members and the Syrian revolutionaries are both
being described with a Soviet term of opprobrium drawn from British
anti-Irish racist stereotypes points to the staid, conventional banality
of evil that lurks in Vladimir Putin’s notion of order.'
Juan Cole provides a video of Pussy Riot's 'hooligan' performance that so riled the religious Russians as well. The emergence of Russian religious and their hanger's-on - the fat, over-painted women, the fat, though unpainted priests, is noted by anyone who has been at those shindigs thrown by oligarchs and wannabes in Russia itself and various global holiday resorts.
'Nietzsche loathed capitalism and capitalists (and the cultural and
aesthetic vulgarity he saw as their legacy) and also despised what he
called "the selfishness of the sick" (Thus Spoke Zarathustra) and the "self-interested cattle and mob" (Will to Power). What he admired was "severe self-love," the kind "most profoundly necessary for growth" (Ecce Homo). "Virtue, art, music, dance, reason, spirituality"--all the things "for whose sake it is worthwhile to live on earth" (Beyond Good and Evil)--all
demand such severe self-love, and for this reason, and this reason
only, Nietzsche wanted to disabuse those capable of such excellences of
their false consciousness about the morality of altruism.'
Not Angels' writing. Angels' syntax isn't transparent enough, prose clear or simple enough. It's here:
the usual suspect.
As the medals are totted up it is worth noting that the Member States of the European Union are way out in front for medals. Even excluding the United Kingdom* - whose people undoubtedly and with impeccable reasoning wish to leave the Union asap - Europe is still tens of golds ahead of China, the United States and Russia.
It might be argued that Europe is not competing as one nation. True. But the evident popular desire to remain together as Europe is a powerful argument that a majority of Europeans can be pleased that not only their individual countries but their continent provides a sporting environment that leads the world.
Adding the medals score of the United Kingdom to the European Union medals' numbers takes Europe's achievement out of the reach of any other part of the world. Sometimes, in the concerns over the renewal and development of the European political settlement that is generating so much financial unease, we forget that our continent is a better place than most others.
* If we count the United Kingdom and the Commonwealth (including South Africa, even though) they are nearly catching the EU medal count without (most properly) the UK.
New Labour came to power in 1997. One of the very earliest of its initiatives was to remove financial and regulatory control from the Governor of the Bank of England (under the guise of making the Bank 'independent') and vesting that control in the Chancellor of the Exchequer - the Financial Services Authority was merely a circuit-breaker for the Chancellor and his Treasury. I write 'his' Treasury because the Treasury rapidly became a personal power base and fiefdom buttressed by a narrative (however false) of 'deals' to divide Executive power between Prime Minister and Chancellor and, much worse, an embedded alternative government to the one we had elected.
Boasts of 'light-touch regulation' yielding the 'end of boom and bust' were a yearly budgetary feature in Parliament, and other public forums, throughout the years subsequent to this profound alteration in the UK power structures until the elected Prime Minister was driven from office by what was effectively a colpo di stato, in 2007.
That deregulating the financial system did not end but positively rocket-fuelled boom and bust is our current sad understanding. The unfolding experience and history of sub-prime lending and its subsequent repackaged onwards-sale, the pillaging of savings and pensions, the outrageous leverage levels undertaken by provincial building societies acting like financial tyros, and the corruption of banking and financial institutional behaviour generally may, or may not, be on the legal side of iffy.
Fixing Libor, money-laundering for international criminal organisations, and for outlawed sovereign states is, however, beyond the Pale. London was used as a centre for what could not be done elsewhere - either because other, off-shore centres were too small or insufficiently developed and trusted, or because appropriate but more severely regulated financial centres wanted to use a cess pit for subprime, and the laundering of gun- and people- running, drugs, and rogue-state and rogue individuals transactions and profits.
Laundering for the State of Iran is the last straw. The Telegraph reports that:
'Standard Chartered denies the allegation made by the New York state
regulator that it carried out sanctions-busting transactions on behalf
of Iranian clients totalling $250 billion over a decade.'
"Standard Chartered thinks the regulator [emphasis added, ed.] got it wrong by enforcing a view
of the rules that was “incorrect as a matter of law”. 'In effect,
Standard Chartered is saying ‘yes, we carried out these transactions,
but we think they were within the regulations’.
The bank’s statement (again quoted by the Telegraph) emphasises too:
“Standard Chartered ceased all new
business with Iranian customers in any currency over five years ago.” [emphasis added, ed.]
So, for ten years they sanctions-busted for Iran - content their behaviour was permissible under the rules extant in London - to the tune of $250 billion. Over 5 years takes us back to before August 2007. In June 2007 a new Chancellor of the Exchequer took office and a horribly old and familiar 'new' prime minister moved into No 10. The ten previous years then take us to 1997. In 1997 that same 'new' Prime Minister had moved into the Treasury, nursing the strong but inappropriate belief that he should be the prime minister.
The kinds of services that have been provided by the City of London - the UK's major industry - do not come cheap. So where are the returns? Ill-gotten returns, certainly, but if we agreed, and we did, to lift the regulation, at least let's see the money. Except what we see is PFI off-balance sheet debt: the hospitals'n'schools, the wilful expansion of state sector employment on inappropriately high wages and benefits, the whole client state, has not even been bought outright. We are in grotesque levels of debt for all of that.
There really does need to be an Inquiry into the conduct of economic and financial and regulatory policy between 1997 and 2007. This is not a banker scandal. It is a political scandal whose ramifications are being uncovered by the regulatory authorities of foreign powers. Apart from querying whether we have we no sense of shame or regret we need to clean up this ten-year disgrace ourselves because otherwise others will do it for us, and with interests as wholly foreign as are their powers.
The Ginori porcelain factory just outside Florence has closed after more than 250 years of producing infinitely desirable china of every kind. Unfortunately it is also dauntingly expensive but sometimes I wish.....those creamy, wholly undecorated plates, thin as thin can be and very flat - we might have managed those.
Or perhaps these
Too late now: the 350 skilled members of the workforce left the factory for the last time yesterday evening.